[G.R. No. 108001.

March 15, 1996]

SAN MIGUEL CORPORATION, ANGEL G. ROA and MELINDA

MACARAIG, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (Second Division), LABOR ARBITER EDUARDO J.
CARPIO, ILAW AT BUKLOD NG MANGGAWA (IBM), ET
AL., respondents.
SYLLABUS
1.

LABOR LAW AND SOCIAL LEGISLATION; LABOR CODE; LABOR

ARBITER;
ORIGINAL
AND
EXCLUSIVE
JURISDICTION;
TERMINATION DISPUTES AND UNFAIR LABOR PRACTICES;
EXCEPTIONS; NOT PRESENT IN CASE AT BAR. - The law in point is
Article 217 (a) of the Labor Code. It is elementary that this law is deemed
written into the CBA. In fact, the law speaks in plain and unambiguous
terms that termination disputes, together with unfair labor practices, are
matters falling under the original and exclusive jurisdiction of the Labor
Arbiter. The sole exception can be found under Article 262 of the same
Code, which provides: The voluntary arbitrator or panel of voluntary
arbitrators, upon agreement of the parties, shall also hear and decide all
other labor disputes including unfair labor practices and bargaining
deadlocks. The exception, being present, the Labor Arbiter properly has
jurisdiction over the complaint filed by the respondent union for illegal
dismissal and unfair labor practice. The filing of a request for
reconsideration by the respondent union, which is the condition sine qua
non to categorize the termination dispute and the ULP complaint as a
grievable dispute as per CBA, was decidedly absent in the case at
bench. Hence, the respondent union acted well within their rights in filing
their complaint directly with the Labor Arbiter.

2.

ID.; ID.; ID.; ID.; ID.; DETERMINED BY ALLEGATIONS OF THE

COMPLAINT. The questioned discharges due to alleged redundancy
can hardly be considered company personnel policies and therefore need
not directly be subject to the grievance machinery nor to voluntary
arbitration. All of the dismissed employees were officers and members of
their respective unions, and their employers failed to give a satisfactory
explanation as to why this group of employees was singled out. It may be
the case that the discharges may really be for a bona fide authorized

caused under Article 283 of the Labor Code. But it is also possible that
such may be a scheme to camouflage the real intention of discriminating
against union members. In any case, these matters will be best ventilated
in a hearing before the Labor Arbiter. The complaint alleges facts
sufficient to constitute a bona fide case of ULP, cognizable by the Labor
Arbiter. This is consistent with the rule that jurisdiction over the subject
matter is determined by the allegations of the complaint.
APPEARANCES OF COUNSEL
Roco Guag Kapunan Migallos & Jardeleza for petitioners.
The Solicitor General for public respondent.
Potenciano A. Flores, Jr. for private respondents.

DECISION
HERMOSISIMA, JR., J.:

In the herein petition for certiorari under Rule 65, petitioners question the
jurisdiction of the Labor Arbiter to hear a complaint for unfair labor practice,
illegal dismissal, and damages, notwithstanding the provision for grievance
and arbitration in the Collective Bargaining Agreement.
Let us unfurl the facts.
Private respondents, employed by petitioner San Miguel Corporation
(SMC) as mechanics, machinists, and carpenters, were and still are, bona
fide officers and members of private respondent Ilaw at Buklod ng
Manggagawa.
On or about July 31, 1990, private respondents were served a
Memorandum from petitioner Angel G. Roa, Vice-President and Manager of
SMCs Business Logistics Division (BLD), to the effect that they had to be
seperated from the service effective October 31, 1990 on the ground of
redundancy or excesss personnel. Respondent union, in behalf of private
respondents, opposed the intended dismissal and asked for a dialogue with
management.
Accordingly, a series of dialogues were held between petitioners and
private respondents. Even before the conclusion of said dialogues, the
aforesaid petitioner Angel Roa issued another Memorandum on October 1,
1990 informing private respondents that they would be dismissed from work
effective as of the close of business hours on November 2, 1990. Private
respondents were in fact purged on the date aforesaid.

Thus, on February 25, 1991, private respondents filed a complaint against

petitioners for Illegal Dismissal and Unfair Labor Practices, with a prayer for
damages and attorneys fees, with the Arbitration Branch of respondent
National Labor Relations Commission. The complaint was assigned to Labor
Arbiter Eduardo F. Carpio for hearing and proper disposition.
[1]

On April 15, 1991, petitioners filed a motion to dismiss the complaint,

alleging that respondent Labor Arbiter had no jurisdiction over the subject
matter of the complaint, and that respondent Labor Arbiter must defer
consideration of the unfair labor practice complaint until after the parties have
gone through the grievance procedure provided for in the existing Collective
Bargaining Agreement (CBA). Respondent Labor Arbiter denied this motion in
a Resolution, dated September 23, 1991.
The petitioners appealed the denial to respondent Commission on
November 8, 1991. Unimpressed by the grounds therefor, respondent
Commission dismissed the appeal in its assailed Resolution, dated August 11,
1992. Petitioners promptly filed a Motion for Reconsideration which, however,
was denied through the likewise assailed Resolution, dated October 29, 1992.
Hence, the instant petition for certiorari alleging the following grounds was
filed by the petitioners:
I.

RESPONDENT LABOR ARBITER CANNOT EXERCISE JURISDICTION OVER

THE ALLEGED ILLEGAL TERMINATION AND ALLEGED ULP CASES
WITHOUT PRIOR RESORT TO GRIEVANCE AND ARBITRATION PROVIDED
UNDER THE CBA.
II

THE STRONG STATE POLICY ON THE PROMOTION OF VOLUNTARY

MODES OF SETTLEMENT OF LABOR DISPUTES CRAFTED IN THE
CONSTITUTION AND THE LABOR CODE DICTATES THE SUBMISSION OF
THE CBA DISPUTE TO GRIEVANCE AND ARBITRATION.
[2]

Petitioners posit the basic principle that a collective bargaining agreement

is a contract between management and labor that must bind and be enforced
in the first instance as between the parties thereto. In this case, the CBA
between the petitioners and respondent union provides, under Section 1,
Article V entitled ARBITRATION, that wages, hours of work, conditions of
employment and/or employer-employee relations shall be settled by
arbitration. Petitioners thesis is that the dispute as to the termination of the

union members and the unfair labor practice should first be settled by
arbitration, and not directly by the labor arbiter, following the above provision
of the CBA, which ought to be treated as the law between the parties thereto.
The argument is unmeritorious. The law in point is Article 217 (a) of the
Labor Code. It is elementary that this law is deemed written into the CBA. In
fact, the law speaks in plain and unambiguous terms that termination
disputes, together with unfair labor practices, are matters falling under the
original and exclusive jurisdiction of the Labor Arbiter, to wit:
Article 217. Jurisdiction of Labor Arbiters and the Commission - (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide x x x the following cases involving all
workers, whether agricultural or non-agricultural:
(1) Unfair labor practice cases:
(2) Termination disputes;
x x x

xxx

x x x.

The sole exception to the above rule can be found under Article 262 of the
same Code, which provides:
Aricle 262. Jurisdiction over other labor disputes - The voluntary arbitrator or panel
of voluntary arbitrators, upon agreement of the parties, shall also hear and decide all
other labor disputes including unfair labor practices and bargaining deadlocks. (As
added by R.A. 6715)
We subjected the records of this case, particularly the CBA, to meticulous
scrutiny and we find no agreement between SMC and the respondent union
that would state in unequivocal language that petitioners and the respondent
union conform to the submission of termination disputes and unfair labor
practices to voluntary arbitration. Section 1, Article V of the CBA, cited by the
herein petitioners, certainly does not provide so. Hence, consistent with the
general rule under Article 217 (a) of the Labor Code, the Labor Arbiter
properly has jurisdiction over the complaint filed by the respondent union on
February 25, 1991 for illegal dismissal and unfair labor practice.
Petitioners point however to Section 2, Article III of the CBA, under the
heading Job Security, to show that the dispute is a proper subject of the
grievance procedure, viz:

x x x The UNION, however, shall have the right to seek reconsideration of any
discharge, lay-off or disciplinary action, and such requests for reconsideration shall be
considered a dispute or grievance to be dealt with in accordance with the procedure
outlined in Article IV hereof [on Grievance Machinery] x x x (Emphasis ours)
[3]

Petitioners allege that respondent union requested management for a

reconsideration and review of the companys decision to terminate the
employment of the union members. By this act, petitioners argue, respondent
union recognized that the questioned dismissal is a grievable dispute by virtue
of Section 2, Article III of the CBA. This allegation was strongly denied by the
respondent union. In a Memorandum filed for the public respondent NLRC,
the Solicitor General supported the position of the respondent union that it did
not seek reconsideration from the SMC management in regard to the
dismissal of the employees.
Petitioners fail miserably to prove that, indeed, the respondent union
requested for a reconsideration or review of the management decision to
dismiss the private respondents. A punctilious examination of the records
indubitably reveals that at no time did the respondent union exercise its right
to seek reconsideration of the companys move to terminate the employment
of the union members, which request for reconsideration would have triggered
the application of Section 2, Article III of the CBA, thus resulting in the
treatment of the dispute as a grievance to be dealt with in accordance with the
Grievance Machinery laid down in Article IV of, the CBA. Stated differently,
the filing of a request. for reconsideration by the respondent union, which is
the condition sine qua non to categorize the termination dispute and the ULP
complaint as a grievable dispute, was decidedly absent in the case at
bench. Hence, the respondent union acted well within their rights in filing their
complaint for illegal dismissal and ULP directly with the Labor Arbiter under
Article 217 (a) of the Labor Code.
Second. Petitioners insist that involved in the controversy is the
interpretation and implementation of the CBA which is grievable and arbitrable
by law under Article 217(c) of the Labor Code, viz:
ART. 217(c). Cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation or enforcement of
company personnel policies shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitration as may be provided in said
agreements. (As amended by R.A. 6715).
Petitioners theorize that since respondents questioned the discharges, the
main question for resolution is whether SMC had the management right or

prerogative to effect the discharges on the ground of redundancy, and this

necessarily calls for the interpretation or implementation of Article III (Job
Security) in relation to Article IV (Grievance Machinery)of the CBA.
[4]

Petitioners theory does not hold water. There is no connection

whatsoever between SMCs management prerogative to effect the discharges
and the interpretation or implementation of Articles III and IV of the CBA. The
only relevant provision under Article III that may need interpretation or
implementation is Section 2 which was cited herein. However, as patiently
pointed out by this court, said provision does not come into play considering
that the union never exercised its right to seek reconsideration of the
discharges effected by the company. It would have been different had the
union sought reconsideration. Such recourse under Section 2 would have
been treated as a grievance under Article IV (Grievance Machinery) of the
CBA, thus calling for the possible interpretation or implementation of the entire
provision on Grievance Machinery as agreed upon by the parties. This was
not the case however. The union brought the termination dispute directly to
the Labor Arbiter rendering Articles III and IV of the CBA inapplicable for the
resolution of this case.
The discharges, petitioners also contend, call for the interpretation or
enforcement of company personnel policies, particulary SMCs personnel
policies on lay-offs arising from redundacy, and so, they may be considered
grievable and arbitrable by virtue of Article 2 17(c). Not necessarily
so. Company personnel policies are guiding principles stated in broad, longrange terms that express the philosophy or beliefs of an organizations top
authority regarding personnel matters. They deal with matters affecting
efficiency and well-being of employees and include, among others, the
procedure in the administration of wages, benefits, promotions, transfer and
other personnel movements which are usually not spelled out in the collective
agreement. The usual source of grievances, however, is the rules and
regulations governing disciplinary actions. Judging therefrom, the questioned
discharges due to alleged redundancy can hardly be cosidered company
personnel policies and therefore need not directly be subject to the grievance
machinery nor to voluntary arbitration.
[5]

Third. Petitioners would like to persuade us that respondents ULP claims

are merely conclusory and cannot serve to vest jurisdiction to the Labor
Arbiters. Petitioners argue with passion: How was the discharges (sic) right
to self-organization restrained by their termination? Respondent did not show..
There is no allegation of the existence of anti-union animus or of the ultimate
facts showing how the discharges affected the rights to self-organization of

individual respondents. In short, petitioners maintain that respondents

complaint does not allege a genuine case for ULP.
[6]

The Court is not convinced.

The complaint alleges that:
5. Individual complainants are bona fide officers and members of complainant Ilaw
at Buklod ng Manggagawa (IBM). They are active and militant in the affairs and
activities of the union.
xxx

xxx

xxx

23. The dismissal or lock-out from work of the individual complainants clearly
constitutes an act of unfair labor practices in the light of the fact that the work being
performed by the individual complainants are being contracted out by the respondent
company, and, therefore, deprives individual complainants of their right to work and it
constitutes a criminal violation of existing laws.
xxx

xxx

xxx

25. The acts of the respondent company in economically coercing employees to

accept payment of seperation and/or retirement benefits, pending final resolution of
the labor disputes between the parties constitute acts of unfair labor practice in the
light of the fact that there is undue interference, restraint, and coercion of employees
in the exercise of their right to self-organization and collective bargaining.
[7]

Short of pre-empting the proceedings before the Labor Arbiter, the above
complaint, makes Out a genuine case for ULP.
In Manila Pencil Co. v. CIR, This Court had occasion to observe that even
where business conditions justified a lay-off of employees, unfair labor
practices were committed in the form of discriminatory dismissal where only
unionists were permanently dismissed. This was despite the valid excuse
given by the Manila Pencil Company that the dismissal of the employees was
due to the reduction of the companys dollar allocations for importation and
that both union members and non-union members were laid-off. The Court,
thru Justice Makalintal, rebuffed the petitioner Company and said:
[8]

x x x The explanation, however, does not by any means account for the permanent
dismissal of five of the unionists, where it does not appear that non-unionists were
similarly dismissed.
xxx

xxx

xxx

And the discrimination shown by the Company strongly is confirmed by the fact that
during the period from October 1958 to August 17, 1959 it hired from fifteen to
twenty new employees and ten apprentices. It says these employees were for its new
lead factory, but is (sic) not shown that the five who had been permanently dismissed
were not suitable for work in that new factory.
A similar ruling was made by this Court in Peoples Bank and Trust
Co. v. Peoples Bank and Trust Co. Employees Union involving the lay-off by
a bank of sixty-five (65) employees who were active union members allegedly
by reason of retrechment. The Court likewise found the employer in that case
to have committed ULP in effecting the discharges.
[9]

This Court was more emphatic however in Bataan Shipyard and

Engineering Co., Inc. v. NLRC, et al.:
[10]

Under the circumstances obtaining in this case, We are inclined to believe that the
company had indeed been discriminatory in selecting the employees who were to be
retrenched. All of the retrenched employees are officers and members of the
NAFLU. The record of the case is bereft of any satisfactory explanation from the
Company regarding this situation. As such, the action taken by the firm becomes
highly suspect. It leads Us to conclude that the firm had been discriminating
against membership in the NAFLU, an act which amounts to interference in the
employees exercise of their right of self-organization. Under Art. 249 (now Art.
248) of the Labor Code of the Philippines, such interference is considered an act of
unfair labor practice on the part of the Company x x x. (Emphasis ours)
It matters not that the cause of termination in the above cited cases was
retrenchment while that in the instant case was redundancy. The important
fact is that in all of these cases, including the one at bar, all of the dismissed
employees were officers and members of their respective unions, and their
employers failed to give a satisfactory explanation as to why this group of
employees was singled out.
It may be the case that employees other than union members may have
been terminated also by petitioner SMC on account of its redundancy
program. If that is true, the discharges may really be for a bona fide
authorized cause under Article 283 of the Labor Code. On the other hand, it
is also possible that such may only be a clever scheme of the petitioner
company to camouflage its real intention of discriminating against union
members particularly the private respondents. In any case, these matters will
be best ventilated in a hearing before the Labor Arbiter.
[11]

It is for the above reason that we cannot hold the petitioners guilty of the
ULP charge. This will be the task of the Labor Arbiter. We however find that
based on the cicumstances surrounding this case and settled jurisprudence
on the subject, the complaint filed by the private respondents on
February 25, 1991 alleges facts sufficient to costitute a bona fide case of ULP,
and therefore properly cognizable by the Labor Arbiter under Article 2 17(a) of
the Labor Code. This is consistent with the rule that jurisdictioin over the
subject matter is determined by the allegations of the complaint.
[12]

Finally, petitioners try to impress on this Court the strong State policy on
the promotion of voluntary modes of settlement of labor disputes crafted in the
Constitution and the Labor Code which dictate the submission of the CBA
dispute to grievance and arbitration.
[13]

In this regard, the response of the Solicitor General is apt:

Petitioners deserve commendation for divulging and bringing to public respondents
attention the noble legislative intent behind the law mandating the inclusion of
grievance and voluntary arbitration provisions in the CBA. However, in the absence
of an express legal conferment thereof, jurisdiction cannot be appropriated by an
official or tribunal (sic) no matter how well-intentioned it is, even in the pursuit of the
clearest substantial right (Concurring Opinion of Justice Barredo,
Estanislao v.Honrado, 114 SCRA 748, 29 June 1982).
[14]

In the same manner, petitioners cannot arrogate into the powers of voluntary
arbitrators the original and exclusive jurisdiction of Labor Arbiters over unfair labor
practices, termination disputes, and claims for damages, in the absence of an express
agreement between the parties in order for Article 262 of the Labor Law to apply in
the case at bar.
[15]

[16]

WHEREFORE, the instant petition is DISMISSED for lack of merit and the
resolutions of the National Labor Relations Commission dated August 11,
1992 and October 29, 1992 are hereby AFFIRMED.
SO ORDERED